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The Asbestos Mess: Do States Have A Way Out?

Business was crestfallen when a Senate plan to create a $140 billion fund to compensate asbestos victims collapsed on Feb. 14. But the setback doesn't mean surrender. Even as lobbyists were ironing out the ill-fated fund's details, their allies were fanning out to state capitals to push for a more modest, and winnable, asbestos fix. The strategy: Write laws giving the sickest victims their due while shielding -- at least for now -- companies from tens of thousands of claims by people who were exposed to cancer-causing asbestos but show no sign of disease.

With insurers and industrial behemoths leading the charge, this "medical criteria" approach to curbing asbestos claims is taking off. Laws are on the books in four states and in the works in 14 more. "We've always two-tracked it" in some states, says Mary H. Terzino, assistant general counsel at Dow Chemical. "This seemed like a helpful backstop."

Workers exposed to asbestos may not fall ill for decades. So most claims -- some 90%, according to a 2005 Rand Corp. study -- are filed by people who aren't sick but need to put down a marker in court to beat the statute of limitations. Medical criteria laws sift through the claims, allowing asbestos victims with cancer and other serious lung diseases to move to the front of the courthouse line. Others retain the right to pursue their cases later if they start showing symptoms.

Lawmakers are taking a cue from state courts. Judges in industrial cities began adopting medical criteria after their dockets flooded with asbestos claims in the early 1990s. In 2004, Ohio became the first state to write them into law. Texas, Georgia, and Florida followed. Bills now are pending in 12 states and are likely to be introduced in two others. "It's a surgical way to take the people who are not sick out of the system but still be fair to them," says lawyer Mark A. Behrens of Shook, Hardy & Bacon in Washington, who has testified in favor of the legislation on behalf of state Chambers of Commerce.

Trojan Horse

The American Bar Assn. called for federal medical criteria legislation in 2003, and the concept has the backing of many lawyers who represent seriously ill victims. But critics are cropping up as emboldened business lobbyists use medical criteria bills as vehicles for broader legal reform. A measure pending in Kansas, for example, would eliminate pain and suffering awards for asbestos victims. "They use the criteria issue as a Trojan horse to get into the legislature, then tack on other tort reforms," says Peter A. Kraus, managing partner at Dallas-based Waters & Kraus, which represents asbestos cancer victims.

The state bills are no cure-all for corporations at risk for their use of asbestos. Unlike the trust fund, which would take claims out of courts altogether and grant victims a set award, medical criteria laws don't shield companies from big payouts by outraged juries. The Ohio and Georgia laws are facing legal challenges. And some plaintiffs stymied in medical criteria states simply are filing their cases elsewhere.

Still, the idea resonates with pols under pressure to fix the system. Now, with the trust fund in limbo, many lawmakers in Washington think a federal medical criteria plan might be the next best thing for businesses' asbestos nightmare. Says Senator John Cornyn (R-Tex.): "There needs to be a national solution."

Congress says "Buy America," but the Federal Highway Administration is going out of its way to choose Chinese, a Washington State congressman charges. Representative Brian Baird (D-Wash.) says the government is circumventing the law so it can purchase foreign steel for the $6.2 billion project to rebuild the San Francisco-Oakland Bay Bridge to better withstand earthquakes.

"Buy America" rules require that federal road projects use domestic steel unless the materials increase the project cost by 25%. Baird says the FHWA and Caltrans, California's transportation agency, are slicing up the project so the mandates apply to only small portions of the work. Baird has a parochial interest: Bay Bridge Fabricators LLC, a consortium of four Washington companies, will be cut out if Chinese steelmakers supply the 320 million pounds of steel needed.

The FHWA is unmoved by Baird's arguments. "The Federal Highway Administration is deeply committed to Buy America provisions in federal law," the agency said in a state-ment. But because only state funds are being used now, the federal Buy America provisions do not apply. Tony Anziano, toll bridge project manager for Caltrans, says it comes down to dollars and cents: "What we're trying to do is build a seismically safe bridge as quickly and in as cost-effective a manner as we can."

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